Stocks are roaring higher on Cyber Monday, as strong online sales are buoying bulls’ hope for a year-end rally. One day isn’t enough proof, but it’s a good start for investors. Let’s take a look at our top stock trades for Tuesday.
Top Stock Trades for Tomorrow #1: Amazon
The leader in e-commerce continues to grow its share of the pie, as online sales continue to maintain strong momentum. Like other tech stocks, bulls are hoping last Tuesday’s low in Amazon (NASDAQ:AMZN) marks the low in this correction.
Last week, shares of Amazon opened near $1,425 before rallying back toward $1,500 on the day. It chopped higher the rest of last week before Monday’s 5% pop. Based on the action now, it wouldn’t be surprising to see AMZN retest its 200-day moving average just below $1,700 and perhaps downtrend resistance.
While that action wouldn’t be a stretch, it’s what AMZN does after that that matters. I need to see shares stay above $1,500 now to become more constructive.
Top Stock Trades for Tomorrow #2: General Motors
Over $37 and the 200-day moving average is a good start, but the $38.50 level looks like a tough nut to crack. That’s okay though. On the stock’s post-earnings move, we said we were buyers on a retest of the 50-day moving average. We got our chance (blue circle) and now GM is moving nicely. So long as it stays above the 200-day moving average, investors can stay long.
Top Stock Trades for Tomorrow #3: General Electric
Another “General” in the market is General Electric (NYSE:GE), and unlike GM, the action isn’t so great on Monday.
On the plus side to Monday’s 1.5% decline is the fact that GE stock is well off the 52-week lows it made earlier in the session near $7.25. The downside of course, is that GE hit new multi-year lows on a day where stocks are solidly in the green.
I remain firmly in the do-not-buy camp, and am watching these three signals on when to buy. As for the charts, a rally back to $9 could eventually be in the cards, but even so, double-digit prices seems a long ways off.
Avoid GE for now.
Top Stock Trades for Tomorrow #4: Overstock
Shares of Overstock (NASDAQ:OSTK) have been wildly volatile the past few days, soaring double-digit percentages on Friday before dropping almost 16% on Monday. The action is concerning, to say the least.
At this point, there are other stocks that look more attractive than OSTK, even with shares above $14.50 support and hovering near $17.50 support. Just because shares are holding up over the backside of downtrend resistance doesn’t mean it’s a good long. They can continue trending lower until the stock puts in a higher low.
For now, the 50-day moving average continues to act as resistance. See if it can clear that while holding support.
Top Stock Trades for Tomorrow #5: Mallinckrodt PLC
Mallinckrodt PLC (NYSE:MNK) has traded very technically since its big spike higher in August. However, it’s violating support on Monday.
A decline down to and close above $25 would have been a solid risk/reward buying opportunity for bulls. However, shares broke right through this level and tumbled to $23.
While it’s finding support on the backside of prior downtrend resistance, the swift knifing through $25 is a concern. Investors who go long here or are eyeing a position need to watch two things: How does MNK trade near $25 (is it support or resistance) and will the 200-day moving average hold as support?